Powell says Fed maintains wait-and-see approach to monetary policy

US Federal Reserve (Fed) Chair Jerome Powell claims the regulator is awaiting more economic data before adjusting interest rates. He also warns that Donald Trump’s tariff policies might push inflation and employment rates further from the central bank’s targets. 

Additionally, Powell says GDP growth has slowed in the first quarter of 2025 from last year’s strong pace. The official notes a modest increase in consumer spending and souring sentiment of businesses and households. 

US import tariffs are likely to trigger a temporary price increase. However, the effect could be more persistent. Despite the significant strengthening of short-term inflation expectations induced by Trump’s trade policy, the longer-term outlook is consistent with the Fed's price-growth target, Powell emphasizes.

At the same time, the central bank chairman reports that the US labor market remains steady, with employment close to its maximum level.

Financial markets expect the Fed to cut rates by a percentage point by the end of the year. The monetary easing cycle may start in June.